Exxon, Chevron Beat Q1 Profit Estimates Despite War Outages
Stronger-than-expected earnings for major Bakken players driven by high prices, but uncertainty looms with Hormuz blocked.
Exxon Mobil Corp. and Chevron Corp., two of the largest operators in North Dakota's Bakken formation, posted stronger-than-expected first-quarter earnings as higher oil and natural gas prices outweighed production outages stemming from the Iran war. Both companies surpassed analyst profit estimates, according to a Rigzone report.
Surging energy prices boosted Exxon’s first-quarter earnings by $1.7 billion, more than offsetting a $400 million blow from war-related production outages. Roughly 15% of Exxon’s worldwide output remains offline, Chief Financial Officer Neil Hansen said. Exxon’s profit excluding one-time items was $4.9 billion, or $1.16 a share, which was 20 cents higher than the average analyst estimate.
For Chevron, adjusted per-share profit reached $1.41, or 51 cents higher than expected. The company benefited from surging prices for crude and gas, though its production dipped roughly 5% sequentially. Chevron had less exposure to Middle East disruptions than Exxon.
Despite the earnings beat, the outlook for the rest of the year is highly uncertain. Exxon and Chevron said that with the Strait of Hormuz remaining all but blocked, future operations are clouded. “The global energy system continues to be under extreme stress,” Chevron Chief Executive Officer Mike Wirth said in an interview.
Exxon may revise its annual production guidance of 4.9 million barrels of oil equivalent per day as the war chokes Middle East energy flows. “Part of the challenge with giving guidance is, as you would imagine, we really don’t know how long the Strait of Hormuz will remain closed,” CFO Hansen added.
The results highlight a complex environment for Bakken operators. While international oil prices have advanced more than 50% since the conflict erupted in late February, the physical disruptions create logistical and planning challenges. The sustained high commodity prices provide a strong revenue floor for Bakken production, but the global instability introduces significant volatility.
Both companies had warned Wall Street last month about negative impacts from the conflict, leading analysts to lower their estimates. This context contributed to the magnitude of the earnings beat. While earnings provide a positive signal for Bakken-focused investors and royalty owners, the companies' caution about the prolonged Hormuz closure suggests operational headwinds could persist.
Source
Rigzone
